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PepsiCo Will Raise Prices to Offset Higher Costs, CFO Says By Bloomberg

by Mike Robinson

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© Bloomberg. PepsiCo Inc.’s brand Pepsi diet soda and regular soda will be available at Bagdad grocery store on Friday, April 9th, 2021. PepsiCo Inc. plans to release earnings figures April 15. Photographer: Luke Sharrett/Bloomberg

(Bloomberg) — PepsiCo (NASDAQ:) Inc. Chief Financial Officer Hugh Johnston said that higher prices will be the “No. 1” tool the beverage and snack maker will use to offset higher commodity, transportation and supply chain costs. 

Speaking in an interview, Johnston said PepsiCo will also change the mix of products it sells in a bid to nudge shoppers toward more profitable items — like variety packs of Lay’s chips instead of larger bags. 

“There’s an opportunity for us to get some margin there,” he said. He said that the maker of Mountain Dew, Doritos, and Doritos had also increased its ability to draw demographic information from different regions. This has allowed it to more effectively use its shelf space. 

“In local grocery stores, we can get more sales per square foot,” he said. These tools “allow us to drive higher pricing and higher profitability.”

PepsiCo reported Tuesday that third quarter sales beat analysts’ estimates and raised its full-year revenue outlook.

Johnston said that the company’s beverage business has been hampered by a shortage of certain supplies, such as aluminum cans used for soft drinks and plastic bottles for Gatorade sports drinks.

“We are not immune to it,” Johnston said. “It’s been a bit of a challenge.”

©2021 Bloomberg L.P.

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